Filing for a Chapter 7, 11, or 13 bankruptcy is serious and not a decision to be taken lightly. Arkansas business owners should take the time to understand the status of their business and if bankruptcy is the best option to solve their financial problems. The following post outlines what to think about before filing for a business bankruptcy in Arkansas.
Is Your Business Making Money?
If you’re consistently losing money and not turning a profit, closing the business could be a good option. It’s important to understand if that’s a short-term loss or if it’s something less manageable. There’s a time to keep investing money into the venture, but it’s also important to know when to pull the plug.
Are the Assets Worth More Than Its Liabilities?
If your business has more assets than liabilities and is still profitable, then staying open may be the best option. However, if you’re finding the debt insurmountable, then reorganizing it through the appropriate bankruptcy option may be the best route. There are a number of considerations here, including if you need to generate more funds to pay back your creditors. On the other hand, if the P&L statement is looking bleak, a Chapter 7 closure may be the best option.
Personal Debt Liability
If you have a personal stake in the debts of the business, it could be in your best interest to keep things running while negotiating with creditors. Closing down shop could force creditors to come after your personal assets for repayment, but another option is to file for Chapter 7 and terminate the personal guarantee that comes with certain debts.
As you can see, there’s so much to consider with business bankruptcy that your first best option is enlisting the help of a knowledgeable bankruptcy law team like the attorneys at Natural State Law. We’ve been helping Arkansas businesses navigate the bankruptcy process for years. Call (501) 916-2878 to learn more about our experience and schedule a free review of your situation.